DeJames v. Magnificence Carriers, Inc.

• Decision Date: 18 June 1980
• Docket Number: Civ. A. No. 78-2892.
• Parties: Joseph DeJAMES, Plaintiff, v. MAGNIFICENCE CARRIERS, INC., Venture Shipping (Managers Ltd.) Nippon Yusen Kaisha, Hitachi Shipbuilding and Engineering Co., Ltd., and Usuki Tekkosho, Defendants.
• Court: U.S. District Court — District of New Jersey

491 F. Supp. 1276

Joseph DeJAMES, Plaintiff, v. MAGNIFICENCE CARRIERS, INC., Venture Shipping (Managers Ltd.) Nippon Yusen Kaisha, Hitachi Shipbuilding and Engineering Co., Ltd., and Usuki Tekkosho, Defendants.

Civ. A. No. 78-2892.

United States District Court, D. New Jersey.

June 18, 1980.

Stanley B. Gruber, Camden, N. J., for plaintiff.

Reiners & Davis by M. Jefferson Davis, Haddonfield, N. J., for defendant Hitachi Shipbuilding and Engineering Co., Ltd.

Christopher S. D'Angelo, Montgomery, McCracken, Walker & Rhoads, Philadelphia, Pa., for defendants.

OPINION

COHEN, Senior Judge:

Plaintiff, Joseph DeJames, a New Jersey citizen, has brought suit under the admiralty jurisdiction of the court, 28 U.S.C. § 1333, to recover damages for personal injuries suffered while working aboard the vessel M. V. Magnificence Venture. The injuries allegedly occurred on January 26, 1977, while the vessel was moored at a pier in Camden, New Jersey.

According to the pleadings defendant, Hitachi Shipbuilding and Engineering Company, Ltd. (Hitachi), entered into a contract in Japan with defendants Magnificence Carriers, Inc., Venture Shipping (Managers Ltd.), and Nippon Yusen Kaisha, the charterers of the vessel, M. V. Magnificence Venture, whereby Hitachi agreed to convert the vessel into an automobile carrier. Plaintiff alleges in his complaint that the conversion work performed by Hitachi was defective and was the direct cause of his injuries.

Presently before the court is a motion by Hitachi to dismiss the complaint against it for insufficiency of service and for lack of in personam jurisdiction. Hitachi contends that it does not maintain the requisite contacts with New Jersey to enable this court to render a binding personal judgment against it. In support thereof, Hitachi has submitted an affidavit from Kiyoshi Ohno, manager of its ship repair business department located in Tokyo, Japan. According to the affidavit, Hitachi completed all work on the vessel at issue in its Japanese shipyard and had no further contact or involvement with the ship once it left Osaka, Japan. The affidavit further states that Hitachi does not maintain an office in New Jersey, nor does it have an agent of any type there or transact any business in the State.

At the outset it should be noted that when a federal court is asked to exercise personal jurisdiction over a defendant sued on a claim arising out of federal law, federal law under the due process clause of the fifth amendment is controlling. See Honeywell, Inc. v. Metz Apparatewerke, 506 F.2d 1137, 1143 (7th Cir. 1975); Fraley v. Chesapeake and Ohio Railway Company, 397 F.2d 1, 3-4 (3d Cir. 1968); Alco Standard Corp. v. Benalal, 345 F.Supp. 14, 24-25 (E.D.Pa.1972). That is not to say, however, that the analysis employed in diversity jurisdiction cases arising under the fourteenth amendment has no bearing on our decision in this case. In this regard, the Court of Appeals for the Third Circuit has remarked that the standard of due process set forth by the Supreme Court in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and its progeny is equally applicable in cases grounded on a federal claim. See Fraley, 397 F.2d at 3; Goldberg v. Mutual Readers League, Inc., 195 F.Supp. 778, 782-83 (E.D.Pa.1961); accord, Wells Fargo & Co. v. Wells Fargo Exp. Co., 556 F.2d 406, 416 n.7 (9th Cir. 1977); Honeywell, Inc., 506 F.2d at 1143.

In response to Hitachi's motion to dismiss, plaintiff argues first, that Hitachi's contacts with New Jersey are sufficient for the purposes of jurisdiction, and second, that where, as here, the court is to determine whether it has jurisdiction over a defendant who is being sued on a federal claim, it may consider not only the defendant's contacts with the forum state, but also the aggregate contacts of the defendant with the United States as a whole. We take up these arguments in turn.

I. HITACHI'S "MINIMUM CONTACTS" WITH NEW JERSEY

In order to determine whether the court may acquire jurisdiction over Hitachi based on its New Jersey contacts, we must first examine the principles set forth in the International Shoe line of cases.

In International Shoe, the Supreme Court ruled that

Due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice."

326 U.S. at 316, 66 S.Ct. at 158.

McGee v. International Life Insurance, 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957) further amplified the doctrine. In that case, suit was brought in California against a foreign insurance company on a policy issued to a California resident. The contract was delivered in California, the premiums were mailed from there, and the insured was living in California when he died. Although the defendant insurer did no other business in California, the Court ruled that it was subject to suit there based on the "substantial connection" of the contract itself to the State of California.

Finally, in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), the Supreme Court held that

the unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.

Id. at 253, 78 S.Ct. at 1239. The Court further elaborated that a court "does not acquire . . . jurisdiction by being the `center of gravity' of the controversy, or the most convenient location for litigation." Id., at 254, 78 S.Ct. at 1240.

It is against this background that we must determine whether the presence of a ship in New Jersey upon which the defendant, Hitachi, had performed conversion work in Japan and the occurrence of an injury allegedly caused by that work, are sufficient bases upon which to subject Hitachi to suit in New Jersey.

Upon careful review of the record, the court finds that the degree and nature of Hitachi's contacts with New Jersey do not satisfy either the "minimum contacts" standard set forth in International Shoe or the "substantial connection" test advanced in McGee. Unlike the corporate defendants in those cases, the corporation in the case at bar, Hitachi, does no business in the forum state, does not maintain an office there, nor employ any marketing or distribution scheme to have its "products" sold in New Jersey.

Plaintiff, however, urges that the nature of Hitachi's business, which involves the building and conversion of merchant vessels to be used in trade all over the world, warrants the exercise by this court of jurisdiction over Hitachi. Specifically, plaintiff argues that a company which delivers ships into the stream of commerce should reasonably anticipate that its "product" will touch ports throughout the world and, concomitantly, should expect to be haled into court in any forum where a defect in one of its ships causes harm.

Among those cases relied upon by the plaintiff is Benn v. Linden Crane Co., 326 F.Supp. 995 (E.D.Pa.1971). In Benn, a Swedish manufacturer had sold a crane f. o. b. Swedish port to a purchaser in Connecticut that had an exclusive distributorship of the manufacturer's products in the United States. Evidence was submitted indicating that the defendant manufacturer knew some of its cranes would end up in Pennsylvania. Based upon these facts, the court held the defendant subject to jurisdiction in Pennsylvania in a products liability action, finding that it had made an "indirect shipment" of goods into Pennsylvania and was "doing business" there. Id. at 997. Plaintiff also cites Smiley v. Gemini Investment Corp., 333 F.Supp. 1047 (W.D.Pa.1971). There, a federal court in Pennsylvania exercised jurisdiction over a California firearms importer who transferred the firearms in issue to a California distributor who, in turn, shipped the goods to Pennsylvania. The court reasoned that "the defendant, although not physically present in Pennsylvania, as an importer and distributor is an indispensable element in the distributive chain, and occupies a vital position of controlling the flow of such articles into the Commonwealth." Id. at 1048. Plaintiff also relies upon Keckler v. Brookwood Country Club, 248 F.Supp. 645 (N.D.Ill. 1965), which adopted the same "stream of commerce" rationale. In that case, indirect shipment of a golf cart by an Indiana corporation, which allegedly caused injury to the plaintiff in Illinois was held sufficient contact with Illinois to allow in personam jurisdiction there. In so ruling, the Keckler court remarked:

The manner in which the injury-producing defect came about has no impact on the question of jurisdiction: the jurisdictional act is not the creation of a defect, but the distribution of defective products in a national way. When a manufacturer voluntarily chooses to sell his product in a way in which it will be resold from dealer to dealer, transferred from hand to hand and transported from state to state, he cannot reasonably claim that he is surprised at being held to answer in any state for the damage the product causes.

Id. at 649 (emphasis in original); accord, Oswalt v. Scripto, Inc., 616 F.2d 191 (5th Cir. 1980); Blum v. Kawaguchi, Ltd., 331 F.Supp. 216 (D.Neb.1971); Gill v. Fairchild Hiller Corp., 312 F.Supp. 916 (D.N.H.1970); Certisimo v. Heidelberg Co., 122 N.J.Super. 1, 298 A.2d 298 (Law Div.1972), aff'd, 124 N.J.Super. 251, 306 A.2d 79 (App.Div.1973).

A close analysis of the "stream of commerce" decisions reveals that the manufacturers or distributors...